Cross-posted from Kate Mackenzie at FTAlphaville.
Well, not a problem apart from all that confusion that arises when a senior Chinese official apparently contradicts official GDP targets and expectations…
Chinese Finance Minister Lou Jiwei said a 6.5 percent economic-growth rate wouldn’t be a “big problem,” signaling the government may tolerate a slower pace of expansion than officials have previously indicated.
That’s from Bloomberg, and Lou made the comments at a press conference in Washington, so he knew it would be picked up by the western media. Xinhua also has a report that paraphrases Lou as saying he expects 7 per cent growth this year. (The official target, remember, is 7.5 per cent).
Here’s the state-controlled Xinhua:
He added that China’s expected GDP growth rate this year is seven percent. In the first quarter the growth rate was 7.7 percent, and the rate in the first half of this year will be slightly lower than 7.7 percent. There is no doubt that China can achieve the growth target, though the seven-percent goal should not be considered as the bottom line.
What can it mean?
Well, really, who knows? But Nomura’s Zhiwei Zhang is not rushing to interpret this as a change of policy to a 7 per cent target:
While we cannot verify if that is what Minister Lou meant, it seems unlikely to us as the 7.5% was approved just four months ago at the National People’s Congress (NPC). Furthermore, Premier Li Keqiang has referenced the country’s economic targets on several occasions in recent months with no mention of any revision of targets.
A revision of the official growth target may require NPC approval, so we regard the quote with caution and wait for any clarification from the government.
Li himself said just a couple of weeks ago that China could meet its 2013 GDP target, and indeed 7.5 per cent was reiterated in the state media with no mention of it changing targets then. It’s worth noting that Zhang’s own forecasts are for growth to fall below 7.5 per cent in the second half, below consensus — so he’s not defending his own call.
The FT’s Beijing correspondent Simon Rabinovitch is also sceptical that Lou’s comments mean a policy change. He points out that when the 7.5 per cent target was announced earlier this year, Wen Jiabao was still formally premier, but Li Keqiang was poised to take the role so would have been involved in setting the target.
Plus, he says, a formal revision of the target would require a legislative amendment.
